Retirement plan sponsors want more from advisers

A desire for greater expertise was cited as the primary reason for switching advice providers, says Fidelity survey

Nov 20, 2014 @ 11:05 am

By Bianca Flowers

Retirement plan sponsors want better service from financial advisers, according to Fidelity Investments'annual survey on plan sponsor attitudes.

“We're seeing that the conversation between plan sponsors and advisers is starting to change,” said Jordan Burgess, senior vice president and head of defined-contribution investment-only sales at Fidelity Financial Advisor Solutions.

Plan sponsors' needs for advice are becoming more complex as all parties recognize the difficulties employees are facing in saving for retirement.

“While fiduciary responsibilities will always be top of mind, the parties recognize the difficulties their employees are facing in saving for retirement.” Mr. Burgess said. “This may require some advisers to shift their mindset — in addition to knowing their fees, funds and fiduciary responsibilities, they have to make sure they're focused on retirement outcomes for employees.”

One of the key findings in the survey was a growing demand for knowledgeable advisers to act on behalf of retirement plans. Forty-two percent of plan sponsors surveyed in 2014 said the need for more retirement plan expertise was the primary reason behind their decision to switch advisers. That figure increased from 31% in 2013 and 30% in 2012.

Nearly 70% of plan sponsors are contemplating design changes to their plans — almost twice as many in 2012. The most commonly anticipated change is using auto-enrollment and automatic-annual-increase programs to help improve overall plan participation and savings rates.

“These plan design changes will likely help participants get closer to that targeted 10% to 15% savings rate,” Mr. Burgess said.

Investment expertise is also a top priority for plan sponsors. Sixty-seven percent of sponsors surveyed made investment menu changes in the past two years, up 35 % from the 2012 study.

Sponsors also want frequent meetings with their advisers to discuss the plan's investment components. That works to the advantage of advisers, who can demonstrate their investment knowledge by optimizing the plan lineup.

Another item of sponsors' wish list is improved communication with their advisers. Fewer than 20% of plan sponsors surveyed said that their adviser consistently communicated the activities they perform for the plan. Advisers can demonstrate their value by reporting the progress made on plan performance measures and the activity performed on behalf of the plan.


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